October 08, 2021 12:34
The EU antitrust watchdog remains skeptical of the merger of Hyundai Heavy Industries and Daewoo Shipbuilding and Marine Engineering.
The decision of the European Commission does not nullify the merger, but if it becomes final the merged company will not be able to do business in the EU, which is home to many global shipping companies.
According to the Fair Trade Commission here on Thursday, the European Commission has rejected a proposal from Hyundai Heavy's holding company Korea Shipbuilding and Offshore Engineering to weaken the monopoly of the mega shipbuilder that will be created by the merger.
KSOE "offered to weaken its potential monopoly by transferring technology to other companies, but the EU rejected the proposal saying it was ineffective and insufficient," the FTC said.
The merger requires the authorizations of antitrust watchdogs in major countries that are home to clients. So far China, Kazakhstan and Singapore have authorized the merger, but the EU and Japan have yet to decide.
The EU worries that the merger would create a monopoly in the LNG vessel market and allow KSOE to jack up prices if it ends up controlling more than 60 percent of it.
One industry insider said, "I suspect that the EU made screening standards tougher to prevent a dominant shipbuilder from emerging at a time when shipbuilding orders are recovering." The EU wants KSOE to resolve its concerns by selling off some of its businesses, but KSOE is refusing because businesses in the shipbuilding industry are all intricately linked.
The EU had halted its review of the merger in July last year due to the coronavirus pandemic.
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